cannot be termed as throughput and should be considered as investment. Sometimes throughput is referred as “throughput contribution” and is akin to the idea of “contribution” within marginal costing that is revenues earned from sales minus “variable” costs while “variable” being termed as per the concept of marginal costing. Investment – it is the money locked within the system. It is money related with machinery‚ buildings‚ inventory and other liabilities and assets. Previously in TOC documentation
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Given that total fixed costs (TFC) are constant as output increases‚ the curve is a horizontal line on the cost graph. Total variable costs The total variable cost (TVC) curve slopes up at an accelerating rate‚ reflecting the law of diminishing marginal returns. Total costs The total cost (TC) curve is found by adding total fixed and total variable costs. Its position reflects the amount of fixed costs‚ and its gradient reflects variable costs. Average fixed costs Average fixed costs are
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INTRODUCTION In this essay I will explain what externalities are‚ why they can be problematic‚ how they can be addressed‚ the role of government and the potential effects of how governments choose to intervene‚ concluding that transaction costs are a major determinant of the best policy response to the issue of externalities. WHAT ARE EXTERNALITIES? Connolly & Munro (1999) describe an externality as “an action by one agent which affects directly the well-being or production possibilities
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others focus on the alternative objectives of firm. One of the reasons that firms might abandon a profit maximising strategy is that it is very difficult for them to identify their profit maximising output‚ as they cannot accurately marginal revenue and marginal cost. Frequently the day to day pricing decisions of firms are taken on the basis of projected demand conditions rather than any systematic calculation of a demand curve. As most of today’s firms operate in a range of separate markets
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Home Depot Student Name Course Date Instructor Name Home Depot Home Depot opened its first home improvement store in Atlanta Georgia in 1978. The company developed a tactical product analysis providing an assortment of products and services to customers. The products Home Depot offers focus on contractors and the do-it-yourself customers‚ as well as free how to clinics and workshops for children allowing them to build an item onsite in the store. Home Depot has grown into an internationally
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for more than two decades‚ used marginal productmarginal cost concepts to generate and dispatch electric power in a more efficient‚ lowercost manner. Southern Company‚ the nation’s third largest utility‚ refers to its load dispatching method as the “Early Bird” system. Southern’s Early Bird is designed to provide automatic‚ computerized control of all the company’s power production and transmission facilities. The Early Bird continuously calculates the marginal cost of delivering additional
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1. Mrs. Kelsey Bowser using the ABC method decided to use the number of garments as the cost driver of the change-over costs. Nevertheless‚ I argue that this was not the best possible choice. I will try to defend my point using the following example. Let’s assume that Guess Who Jeans demands 600‚ not 500 garments per shipment. Although the number of garments changes‚ the total change-over costs would stay the same‚ because no additional retooling of the machine would be necessary. The whole change-over
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Question 1: (a) Suppose the income elasticity of demand for pre-recorded music compact disks is +5 and the income elasticity of demand for a cabinet maker’s work is +0.5. Compare the impact on pre-recorded music compact disks and the cabinet maker’s work of a recession that reduces consumer incomes by 10 per cent. (2 marks) (b) How might you determine whether the pre-recorded music compact discs and MP3 music players are in competition with each other? (2 marks) (c) Interpret the
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Barriers to entry: In theories of competition in economics‚ barriers to entry are the obstacles and hindrances that make it difficult for a company to enter a given market or industry. The most common barriers to entry include government regulation and economies of scale‚ but nowadays it is increasing for entry barriers to be viewed as a cost. Stigler defined barriers to entry as “A cost of producing which must be borne by a firm which seeks to enter an industry but is not borne by firms already
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that it can increase labor productivity and‚ there- fore‚ net revenue by reducing air pollution in its mines. It estimates that the marginal cost function for reducing pollution by installing additional capital equipment is MC = 40P where P represents a reduction of one unit of pollution in the mines. It also feels that for every unit of pollution reduction the marginal increase in revenue (MR) is MR =1‚000 =10P. How much pollution reduction should Appalachian Coal Mining undertake? The installation
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